1959 (5) TMI 50 - SC - Indian Laws

Summary

Issues Involved:
1. Justification of the termination of services of 142 employees by the Joint Official Liquidators.
2. Justification of the auction-purchaser's refusal to continue the employment of the 142 employees.
3. Reliefs entitled to the employees.
4. Maintainability of the appeal by the Company and auction-purchaser before the Labour Appellate Tribunal.

Issue-Wise Detailed Analysis:

1. Justification of the Termination of Services by the Joint Official Liquidators:
The Tribunal examined whether the notice dated July 23, 1954, terminating the services of 142 employees with effect from July 24, 1954, issued by the Joint Official Liquidators, was justified. The Tribunal found that the termination was part of the winding-up process of the Company, which was confirmed by the High Court. The Tribunal awarded compensation under Section 25(F)(b) of the Industrial Disputes Act, 1947, and directed the Company to pay compensation to the entitled workmen. The High Court had also directed the Liquidators to pay arrears of salary and wages in lieu of notice to the employees.

2. Justification of the Auction-Purchaser's Refusal to Continue the Employment:
The Tribunal considered whether the auction-purchaser was justified in refusing to continue the employment of the 142 employees. The auction-purchaser had purchased the business free from all encumbrances and liabilities. The Tribunal held that since the employment of the workmen was terminated by the Liquidators before the auction-purchaser took possession, there was no employer-employee relationship between the auction-purchaser and the discharged employees. Consequently, the Tribunal found the reference incompetent concerning the auction-purchaser and justified his refusal to continue the employment.

3. Reliefs Entitled to the Employees:
The Tribunal awarded compensation to the employees under Section 25(F)(b) of the Industrial Disputes Act, 1947. The compensation was to be paid by the Liquidators from the assets of the Company according to law. The auction-purchaser was not held liable for any compensation or dues claimed by the workmen, as he purchased the business free from encumbrances and liabilities.

4. Maintainability of the Appeal by the Company and Auction-Purchaser:
The Labour Appellate Tribunal dismissed the appeal filed by the Company and the auction-purchaser as incompetent. The appeal by the Company was dismissed because it lacked the necessary sanction from the High Court under Section 179 of the Indian Companies Act, 1913 (re-enacted as Section 457 of the Companies Act, 1956). The appeal by the auction-purchaser was dismissed because he was not aggrieved by the Award, having been exonerated from its terms. The Supreme Court upheld the Labour Appellate Tribunal's decision, stating that the appeal was not maintainable as the auction-purchaser had no locus standi to prefer an appeal, and the necessary sanction from the High Court was not obtained for the Company to file an appeal.

Conclusion:
The Supreme Court dismissed the appeal, affirming that the Labour Appellate Tribunal was correct in dismissing the appeal as incompetent. The termination of employees by the Liquidators was part of the winding-up process, and the auction-purchaser was not liable for the employees' dues. The appeal was not maintainable due to the lack of necessary sanction from the High Court and the auction-purchaser not being an aggrieved party. The dismissal was without prejudice to any rights the appellants might have.